Correlation Between Calvert Global and Invesco Global

Can any of the company-specific risk be diversified away by investing in both Calvert Global and Invesco Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Calvert Global and Invesco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Global Water and Invesco Global Water, you can compare the effects of market volatilities on Calvert Global and Invesco Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Calvert Global with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Global and Invesco Global.

Diversification Opportunities for Calvert Global and Invesco Global

0.89

Correlation Coefficient

Calvert Global  Invesco Global

Very poor diversification

The 3 months correlation between Calvert and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Global Water and Invesco Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Water and Calvert Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Calvert Global Water are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Water has no effect on the direction of Calvert Global i.e., Calvert Global and Invesco Global go up and down completely randomly.

Pair Corralation between Calvert Global and Invesco Global

Assuming the 90 days horizon Calvert Global Water is expected to under-perform the Invesco Global. In addition to that, Calvert Global is 2.59 times more volatile than Invesco Global Water. It trades about -0.3 of its total potential returns per unit of risk. Invesco Global Water is currently generating about -0.31 per unit of volatility. If you would invest  4,141  in Invesco Global Water on September 27, 2024 and sell it today you would lose (210.00) from holding Invesco Global Water or give up 5.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Calvert Global Water  vs.  Invesco Global Water

Calvert Global Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Global Water has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Invesco Global Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Calvert Global and Invesco Global

The main advantage of trading using opposite Calvert Global and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Global position performs unexpectedly, Invesco Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Global will offset losses from the drop in Invesco Global's long position.

The idea behind Calvert Global Water and Invesco Global Water pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.